Sign Up Log in

    In January, the Eurozone’s HCOB Manufacturing PMI surpassed forecasts, reaching 49.4 instead of 49.

    by VT Markets
    /
    Jan 23, 2026
    The Eurozone HCOB Manufacturing PMI for January has come in at 49.4, which is better than expected. This marks a small improvement from last month, but it still falls below the neutral level of 50. Even though the PMI is under 50, it suggests some strength in the manufacturing sector. This report might boost market confidence, particularly influencing the Euro’s value against the Dollar and other key currencies.

    Historical Context

    In January 2025, the Eurozone manufacturing PMI was also 49.4, briefly giving hope despite being in contraction territory. That figure helped the Euro gain some strength against the Dollar. However, today’s flash manufacturing reading for January 2026 shows a weaker trend at 48.8. This is lower than last year’s figure, primarily due to slow German industrial orders, which dropped 1.2% last quarter. The market is now worried about the chance of a technical recession in the first half of this year. This situation suggests potential weakness for the Euro. Traders might find buying put options on the EUR/USD appealing for protection in the coming weeks. Options with a strike price around 1.0700 could be a smart choice. Right now, the cost of these options is reasonable since implied volatility has not risen much.

    Market Reactions and Strategies

    In early 2025, low energy prices helped stabilize the manufacturing sector. This year, though, a recent rise in natural gas futures, now over €45 per MWh, is putting pressure on profit margins and weakening the outlook. Therefore, considering short positions on European industrial sector futures could be a viable strategy. For those invested in European interest rates, this disappointing manufacturing data raises the likelihood of an earlier ECB rate cut. The market is already anticipating a 60% chance of a 25 basis point cut by June 2026. Using derivatives like 3-month Euribor futures could take advantage of this expectation for lower rates. Create your live VT Markets account and start trading now.

    here to set up a live account on VT Markets now

    In This Article

    see more

    Back To Top
    server
    Click Click Click Click Click
    Follow us on

    Hello there 👋

    How can I help you?

    Chat with our team instantly

    Live Chat

    Start a live conversation through...

    • Telegram
      hold On hold
    • Coming Soon...

    Hello there 👋

    How can I help you?

    telegram

    Scan the QR code with your smartphone to start a chat with us, or click here.

    Don’t have the Telegram App or Desktop installed? Use Web Telegram instead.

    QR code